The P/E Ratio That Really Counts
Carole L. Jurkiewicz, Ph.D.
and
Roger G. Brown, Ph.D.
Department of Political Science
University of North Carolina at Charlotte
While the differences in decision making between effective and ineffective leaders is usually clear in hindsight, predicting effectiveness in advance of assigning broad authority is more essential than ever; the costs of removing ineffective leaders is skyrocketing, as are the costs to the organization of executive mistakes. To be effective today, leaders must compete for survival and success while at the same time maintaining high standards of fiscal, social, and personal trust. Superceding financial concerns, it’s the P/E (Power/Ethics) ratio that really counts. This study employs the Mach V measure of power motive and the DIT measure of level of ethical reasoning to predict executive effectiveness. The results suggest such predictions can be made with high levels of confidence. The implications for enhancing leader and organizational effectiveness are highlighted.
The link between power and ethics was likely forged long before
history makes note of it, though Plato is often credited with advancing the
idea that power is a necessary feature of 'the good' (Kreiger and Stern, 1968).
Aristotle, following the Greek tradition that power can be used to achieve good
ends, pointed to a reciprocity between the power wielder and the power
subject's capacity to respond, thereby establishing the separation between
means and ends that is still very much a focus of the debate about the exercise
of power and ethical conduct today. It was, in fact, Plato and Aristotle who
adopted the Greek word 'ethos' to describe their studies of Greek values and
ideals (Solomon, 1992). The Romans, on the other hand, emphasized political
power independent of ethical purposes. Power was defined in terms of a resource
one had, rather than by what specific outcomes it achieved. Power and ethics
were seen as unrelated, an approach advocated by many who yet today claim that
the exercise of power in organizations is amoral (e.g., Friedman (1970), Ladd
(1970, 1984), Werhane (1980), Keeley (1981), and Velasquez (1983).
The Greek's ethical form of power, as defined by ends, and the
Roman's political form, as defined by origin, remained separate schools of
thought during most of the Middle Ages. It wasn’t until the mid 1200's when
Thomas Aquinas set forth God as the ultimate authority for political power,
that the means and ends of power were conjointly considered (Kreiger and Stern,
1968). Rooted in this ideological split between the Greeks and the Romans are
the questions surrounding the power-ethics link which is the focus of this
study.
In today's egalitarian society we have come to view power and those
who possess it as potentially, if not inherently, unethical and immoral.
Because the exercise of power embodies the purposeful influence of one person
over another, because it necessarily entails overcoming some resistance or
opposition, the common assumption is that it represents a basic infringement of
human rights, that in some ill-defined sense no one should have power over
anyone else (Solomon and Hanson, 1983). It comes as no real surprise that we
often view those who hold power in organizations as basically corrupt (e.g.,
Robin and Reidenbach, 1989; Clegg, 1979; Baumhart, 1961), and becoming
increasingly more so as time goes by (Brenner and Molander, 1977).
The connection between power and ethics has been in evidence since
the earliest writings. The intertwining
of these concepts is so complete it is nearly impossible to consider one
without considering the other, especially insofar as one seeks to understand
executive behavior within organizations. When one seeks to implement an ethical
system within an organization, one must carefully consider the power
relationships. When one intends acts of power in organizations, there is
invariably an ethical component connected to the type of power to be used, who
is subject to it, and what checks should be placed upon it.
This homology between power and ethics was portrayed perhaps most
provocatively by Machiavelli (1513) in his contention that power and
self-interest are the sires of virtue, that the greater the imperative of
survival, the greater the virtue. He asserted power is absolutely necessary if
a leader is to be effective, that the morality of power is inconsequential. To
him, any means are justified to perpetuate the organization. Machiavelli, among many others, believed
persons in power indeed have an ethos that affects, in positive and negative
ways, those who are subject to them, but the organizational effectiveness of
such persons depends solely on their ability to capitalize a power base and
operate from it. Machiavelli, in fact, enthusiastically urges leaders to dirty
their hands to achieve successes. Not to dabble in unethical procedures when
necessary is tantamount to failure, in his view.
In decrying the dearth of effective leaders in organizations
today, scholars and practitioners alike echo Machiavelli in pinpointing the
cause of the 'leadership crisis.’ They
collectively declaim a lack of political skills, or the inability to accumulate
and wisely use power, as the missing ingredient (e.g., Yukl, 1999; Bennis and
Nanus, 1985; Gardner, 1990; Pfeffer, 1981, 1992, 1998). Kotter (1992, 1998) sums up the concern in
that the increasing complexity of organizations makes it almost impossible for
managers to achieve their goals through persuasion or formal authority alone,
that what they need is power, an amplified view of Quinn (1988) and Mintzberg
(1983).
Contemporary arguments for an inextricable link between power and
ethics contend power is a thoroughly moral phenomenon (Siu, 1979). It is argued that with some
justification one might be inclined to dismiss the question of the morality of
power on the premise that power is simply the means to an end and, hence,
basically morally neutral, that only the ends have moral connotations. Yet power in the modern view is seen as much
more than the sheer wielding of force. Power begins with a specification of
purpose, and its expression necessarily interlaces means and ends in that a
determination is made as to the kinds of resources that will be used. Understanding how these variables operate
within complex human systems becomes concomitantly more important. Emerging
concern for increasing ethicality in organizations leads one to such questions
as: Do effective and ineffective leaders differ in regard to power motive and
level of ethical reasoning? Can intensity of power motive and level of ethical
reasoning be predictors, in part, of executive effectiveness? These questions are implicit in much of
today's scholarly and popular literature (Pfeffer, 1998; Torbert, 1991; Clegg,
1989; Boulding, 1990; Lukes, 1986). This study addresses these questions using
a measure of power motive and a measure of ethical reasoning as independent
variables, and an established effectiveness criterion as the dependent
variable.
Many indicators point to the increasing politicization of
organizations in the U.S. In characterizing a modern organization one can cite
the same elements Pfeffer (1981, 1998) says are perquisite to the use of power:
resource scarcity; conflict; heterogeneous collections of values, beliefs, and
attitudes; eroding institutional and authoritative confidence; and a growing
movement toward corporate accountability and social responsibility. Pfeffer's
Law of Political Entropy states that once politics is introduced into a
situation, it's very difficult if not impossible to restore rationality, which
means that over time more and more organizations will come to be characterized
by the political model. Configuring organizations as political entities
positions them as not unlike governments, where power is critical to executive
effectiveness and at the same time diffuse (Clegg, 1979). The criteria
differentiating effective leaders from ineffective ones may be resultant of
their ability to adapt to and/or influence environmental conditions (Yukl,
1999). A politicized environment would
naturally select out as effective those leaders who are able to navigate their
way through the system to achieve desired ends. Understanding such politicized
organizational environments necessitates two things: 1) knowledge of
organizational politics; and 2) an recognition of political will and expertise
(Pfeffer, 1992, 1998).
Zaleznik and Kets de Vries (1985), among others, maintain that the
ability to control and influence others is the basis for directing
organizations and attaining social goals, that leadership in its essential form
is the exercise of power. They note that successful executive careers depend
upon securing power, that power transforms individual interests into coordinated
activities that accomplish specific, valuable ends. An organization's chief
concern is, arguably, the optimum allocation of its resources to ensure its own
survival, which requires that at least to some extent, it subordinate the needs
and values of the individual to its own interests, that being the supreme need
for power (Sterling, 1958).
McClelland and Burnham (1976), in researching possible
correlations between power, affiliation, and/or achievement motives and leader
effectiveness, revealed through empirical study that good leaders ("ones
who get the best out of their subordinates and who thereby produce positive
results for their organizations") have strong power motives and relatively
weak needs for achievement and affiliation. Conversely, they contend that the
most ineffective leaders have strong affiliative motives and low needs for
power and achievement. In support of
these theoretical notions is Heimovics', Herman's, and Jurkiewicz 's (1993)
empirical finding that effective leaders are much more likely to think and act
in accordance with a political frame than are a group of ineffective leaders.
Leaders, therefore, need power in order to achieve outcomes in
organizations and, hence, be perceived as effective.
While the connection between power and effective leadership has
fairly broad support, the scope of literature from which to draw in forging an
ethical-effective link is considerably less substantive.
There is ample evidence to support the notion that leaders are the
primary influencers of ethical conduct in organizations (e.g., Baumhart, 1961;
Schmidt and Posner, 1983; Hitt, 1990; and Jansen and Von Glinow, 1985). Bennis
and Nanus (1985) claim that leaders are responsible for the ethical standards that
govern the behavior of individuals in the organization, that leaders set the
moral tone, and that they are personally responsible for the set of ethics or
norms that govern behavior. Cooper (1990) and Denhardt (1988) go so far as to
say that unethical organizations pose an actual threat to the ethical
individual who becomes employed there.
Ethical behavior in organizations is directly and most frequently
attributable to the ethical standards of top leaders, and the culture to which
they substantially contribute (Robin and Reidenbach, 1989; DeGeorge, 1986). As
Morgan (1986) states, while formal leaders do not have a monopoly on creating
organizational culture, "their position of power lends them a special
advantage in developing value systems and codes of behavior, since they often
have the power to reward or punish those who follow or ignore their lead."
Even if a leader's position on the matter is one of organizational amorality,
their behavior nonetheless defines their organization's ethical framework via
social influence processes (Kelman, 1961; Luthans and Kreitner, 1965; Nord,
1969; Skinner, 1948, 1971; Bandura, 1962; Sims and Gioia, 1986; and Weiss,
1977), which implies an inextricable connection between ethics and leadership.
Baumhart (1961), and later Brenner and Molander (1977), found that
individuals in positions of power in organizations do set the standards of
ethical conduct for their firms and that most believe that, in the long run,
sound ethics is good business. Bok
(1978), maintains that 'unethical' behavior, in the form of lying or any other
overt or implicit manifestation, is counterintuitive to effective
leadership. Lewis (1991) adds support
for the argument that effective leaders must have an ethical orientation if
their organization is to prosper. Her contention is that, even given the myriad
opportunities for moral compromise, ethical survival ensures professional
success.
Andrews (1989) reports the practitioners’ case that ethical
concerns are synonymous with effective leadership. Responsible moral judgement
is seen as a key component of effective decision making. The conclusion is that an adequate
organizational strategy must reflect the personal values and ethical
aspirations of its leaders, and that in so doing the leader defines the
atmosphere in which effective leadership is inseparable from ethical
considerations.
Jackall (1988) offers additional theoretical support to the notion
that effective leadership and career success are synonymous with a strong moral
code that guides behavior. While the structure of organizations allows for a
diverse range of evaluative rules and standards among the people employed
there, success is defined by adherence to the organization's overriding
ethic. Jackall maintains that leader
effectiveness is inextricably tied to a concern for the nature of that
ethic.
The stance taken by these practitioners and scholars alike is
clearly that executive effectivenes is linked to ethical action, that
responsible moral judgement is viewed as inextricably tied to leader
effectiveness.
Cartwright and Zander (1968) theorize that the burdens and
responsibilities associated with power are likely to lead to compassionate,
rather than exploitive, behaviors on the part of the power wielder. Berle
(1967) also theorizes that power ennobles the individual by expanding and
deepening one's understanding of oneself, while also noting that possessing
organizational power frequently obliges the individual to ignore and rise above
conventional morality. Rogow and Lasswell (1963) purport that having power
leads neither to corruption nor ennoblement. They theoretically contend that
the connection between power and corruption is dependent upon the various
combinations of individual ego needs and type of social organizations to which
the individual belongs. This finding is
supported by Zahra (1984) who concluded leaders perceive power-related
behaviors as neither inherently unethical or immoral, and that becoming skillful
at exercising these behaviors is key to the advancement of one's career.
In summary, the link between power and ethics, at least
theoretically, is strong and compelling.
Superceding financial concerns, it is the P/E ratio that really counts
when assessing overall leader effectiveness.
How these two dimensions affect leader performance, and the extent to
which measures of each can be used to predict leader effectiveness constitutes
the scope of this study.
Three basic propositions influence the choice of power measure
used in this study. 1) Attributions of power can be misdirected. 2) The
usefulness and generalizability of any power measure is essential to the
strength of the inferences one may hope to draw from the research. 3) Generally
speaking, those who are the most powerful tend to deny it and verbally downplay
their impact, while the less powerful tend to boast and overestimate their
influence (Pfeffer, 1981). Therefore, ex
post facto measures have been discounted as relatively less precise and
more prone to error. Instead it is argued that for the purposes of this study,
the most accurate measures of individual power in organizations must focus ab initio, on the motives or intentions
of the power wielder that guide, consciously or unconsciously, powerful
behaviors. Bachrach and Baritz (1962) offers additional support for this
approach by arguing that if one concentrates the investigation of power only on
concrete acts of decision making by specific agencies, one completely misses
the phenomenon of 'non-decision making,' whereby the powerful person ensures
that things do not get done (the ‘Second Face’ of power). This ab initio approach is advocated as well
by Weber (1978), Russell (1938), and Wrong (1988) who individually argue
against the limitations of ex post
measures of power.
Psychological theory provides strong support for making
assessments of individual power based upon determinants rather than
consequences, knowing that in order to exercise power one must first have the
need or desire for it within themselves (Pfeffer, 1981). An individual's
behavior is thought to be guided and directed by underlying motives as they are
given opportunity to express themselves in specific environments.
The Machiavellian Scale, the Mach V, (Christie and Geis, 1970) is
the measure of power motive selected for this study of leaders for three
reasons: 1) its strength as an ab initio measure; 2) its high levels of
reliability and validity; and 3) the normative scales developed from its
previous use. Table 1 provides a
listing of the characteristics associated with high scores on the Mach V.
Character Dimensions of High Scorers on the Mach V Measure of Power Motive
Apolitical, Less Authoritarian
Socially Sophisticated, More Uninhibited
Stereotypes More, Discriminates Less
Exhibits Less Psychopathology
Less Anxious, Cooler Under Pressure
More Suspicious of Others
Generally Holds Power Positions in Groups
More Adept Bargainers and Negotiators
Especially Skillful in Ambiguous Situations
Impersonally Task, Not Ego Involved
Tendency to Disregard Others' Power Positions
Are More Flexible and Innovative
(For full text
see Christie and Geis, 1970.)
Because this
study approached the research questions from the perspective of an executive reasoning
about ethical issues, the widely accepted Developmental Theory and Moral
Maturity Index (DTMMI) (see White, 1999; Kohlberg 1969, 1976a, 1976b, 1978,
1981) as operationalized by Rest (1972a) in the Defining Issues Test (DIT) was
selected. The six stages of ethical
reasoning as conceptualized by Kohlberg present a progression of moral
decision-making from the simplest level, wherein one defines “right” by those
actions which do not result in punishment (Stage 1), to the most complex,
wherein “right” represents the universal moral principles determined through
rational, informed personal reflection (Stage 6), as outlined in Table 2. Cognitive identification and reconciliation
of competing moral perspectives characterizes the highest levels, while the
lowest are rooted in egocentrism (for a complete typology of the stages see
Kohlberg, 1981). While the DIT does not
measure these stages directly, scores on the DIT demonstrate a high degree of
reliability and construct validity (Davison and Robbins, 1978; Rest, 1997,
1979b), and correlate with Kohlberg’s scores on the DTMMI measure of moral
maturity and are much easier to compute (Rest et al., 1997). There are no known reports of the Mach V and
DIT instruments being used together.
Kohlberg’s Six Stages of
Moral Judgement, Measured by the D.I.T.
Stage 6
The Preeminence of
Universal Ethical Principles
Self-determined principles of justice
Respect for persons as ends, not means
Principles supercede laws, social agreements
Stage 5b
Uphold Basic Rights,
Values, Social Contracts
Rules are ‘relative’ and compromise the social contract
Obligated only to obey laws, contracts freely chosen
Good based on rational calculation of overall utility
Stage 4
Social System and
Conscience Maintenance
Right is fulfillment of duties to society
Laws upheld except when in conflict with social duties
Concerned with ‘what if everyone else did it?’
Stage 3
Mutual Expectations,
Relationships, Conformity
Concern with others’ feelings,
keeping trusts, living up to expectations
Obeyance of Golden Rule
Loyalty, respect, and gratitude
Stage 2
Individual Instrumental
Purpose and Exchange
Right is acting to meet one’s own interests and needs
Awareness that others’ interests may not match one’s own
Sense of fairness, following through on the ‘deal’
Stage 1
Punishment and Obedience
Right is to avoid breaking rules
Obedience to authority, authority always knows what is best
Avoiding punishment for doing wrong
(For full text see Kohlberg, 1981.)
Expectations
In accordance with
the literature, the following was anticipated:
1) The average score of an effective executive group on the Mach V
will be significantly higher than the average score of a comparison group.
2) The average level of ethical reasoning of the effective
executive group on the DIT will be significantly higher than the average score
of the ineffective group.
3) The average P-score of effective leaders on the DIT will be
significantly higher than the average P-score of the ineffective group.
4) Higher scores on the Mach V and the DIT will be predictive, in
part, of executive effectiveness.
Participants included 42 chief executive officers of nonprofit
organizations in a large metropolitan community. An effectiveness criterion had been previously established for
these subjects in previous research (Heimovics, Herman, and Jurkiewicz,
1993). The sample was divided equally
into two groups: 21 effective leaders and 21 ineffective leaders. As previously
reported (Heimovics, Herman, and Jurkiewicz, 1993), a panel of judges
identified a sample of chief leaders whom the judges regarded as highly
effective, based upon a complex set of criteria. A comparison group of
ineffectives was then randomly selected from a pool of chief leaders not so
designated. The highly effective sample comprised those leaders who received at
least two nominations from a panel of individuals who occupy positions where
judgements of executive effectiveness are required. Twelve nominators, working
independently, selected a total of 90 CEOs whom they considered to be highly
effective. A CEO who received a nomination from at least two people became part
of the effective sample; 30 CEOs received at least two nominations of whom 26
agreed to participate in that study. The selection of a ineffective sample came
from lists provided by referral centers and consortia of nonprofit
organizations. After eliminating those with one nomination, a ineffective
comparison group was randomly selected. It was then determined by telephone
whether the comparison CEOs had been head of their current organization at
least 18 months. Three who had not were excluded on the assumption that they
had not had the opportunity to become visible to the nominators, and
replacements were randomly selected. Of the 30 CEOs selected for the
ineffective comparison sample, 24 agreed to participate in that study.
Subjects were sent a packet containing a letter requesting their
participation, the Mach V, the DIT, a demographic data sheet, and a postage
paid return envelope. The return materials identified the subject by a three
digit code printed on each page as well as the return envelope. Packets were
resent to those who did not respond within three weeks. All participants in the Heimovics, Herman,
and Jurkiewicz studies previously cited were contacted for inclusion in this
study. Of those 50, 21 effective and 21 ineffective leaders completed and
returned useable instruments.
1) The average score of
the effective executive group on the Mach V will be significantly higher than
the average score of the comparison group.
2) The average score of
the effective executive group on the DIT will be significantly higher than the
average score of the comparison group.
Both hypotheses 1 and 2 were confirmed. The effective group scored
significantly higher on both instruments than did the ineffective group. The t
value for the differences in mean scores on the DIT’s measure of level of
ethical reasoning is 2.89, with p< .01. The t-value for the differences in
mean scores on the Mach V is 2.86, again with a level of significance less than
.01. The results of these one-tailed tests of the first and second hypotheses
based on scores on the DIT and the Mach V, are reported in Table 3. Scores on the DIT were computed two ways for
this analysis. As reported in Table 3,
average Stage and Level of the two groups were computed and compared. Table 3 also reports the more commonly used
P-score, which indicates the relative importance, described as a percent score,
a subject gives to principled moral considerations when deciding about moral
dilemmas. Both scoring methods follow
the recommended scoring protocol as detailed by Rest (1986).
Table 3
Test of Difference in Dit,
Mach V, and P-Scores for Effective and Ineffective Leaders
Effective Ineffective
Leaders
Leaders t-Value Significance
DIT 3.857 3.429 2.893 p < .01
(.478) (.482)
Mach V 103.33
96.38 2.86 p
< .01
(
9.02) (6.56)
P-Score 65.14 33.57 20.362 p < .001
(4.96) (5.08)
DIT values range from 1 to 6 (see Kohlberg, 1981).
P-scores on the DIT can range from 0 to 95, with a score of 35
being average (Rest, 1990; Rest et al., 1997).
Scores on the Mach V can range from 40 to 160, with a score of 100
being average (Christie and Geis, 1970).
Standard deviations are shown in parentheses.
The assumption of equal variances between the two groups was
supported (p=.843).
To assess whether the
preference for principled moral reasoning among effective leaders is
significantly higher than is the preference for principled moral reasoning
among ineffective leaders, a t-test was used to compare the P-scores of the two
groups (see Table 3). The difference in
means between the two groups was conclusively in the direction anticipated,
with effective nonprofit leaders scoring an average of 65.14, and ineffective
leaders scoring an average of 33.57.
Effective leaders exhibited significantly higher preferences for
principled ethical reasoning, at a confidence level of over 99%, than did their
less effective counterparts.
3) Those leaders with higher relative scores on the Mach V will also have higher relative scores on the DIT.
A test of correlation of the scores on the two instruments reveals
a significant positive relationship between the two measures, as was postulated
in our third hypothesis. Pearson's r in this instance is .427, with p>.01.
4) Higher scores on the
Mach V and the DIT will be predictive, in part, of executive effectiveness.
To test the fourth hypotheses, a discriminant analysis was used to
determine the strength of any relationship between the predictor and dependent
variable, effectiveness. Additionally,
this technique permits the user to predict group membership and assign
respondents to one or the other group based upon their Mach V and/or P-score
values. Table 4 reports the results of
the analysis wherein the Mach V and the P-scores are the predictor variables
and effective/ineffective leadership is the dependent variable.
Discriminant Analysis of Effective and Ineffective Leaders by Scores on the Mach V and Dit Instruments
Wilks'
Coefficient Lambda Sig.
DIT 69921 .082692 p< .0061
MACH V 68965
.71497 p < .0014
CLASSIFICATION RESULTS
No.
of Predicted Group Membership
Actual Group Cases Effective Ineffective
Effective 21
15 6
71.4% 28.6%
Ineffective 21
4 17
19.0% 81.0%
Percent of ‘grouped’ cases correctly classified: 76.19%
In addressing our hypothesis on whether scores on these two
instruments could be in part predictive of executive effectiveness,
discriminate analysis using Stage and Level scores successfully predicted group
membership for 71.4% of the effectives, and 81.0% of the ineffectives. Overall,
the percent of grouped cases correctly classified was 76.2%. Looking at the individual scores of those
subjects whose group membership was not predicted, 28.6% of effectives and 19.0%
of the ineffectives, reveals some consistency in scores across both variables.
Four of the 6 effectives scored lower than their group average on both
instruments, and 3 of the 4 comparisons scored higher than their group average
on both instruments.
The results provide empirical evidence, the first of its kind,
linking power, ethics, and leader effectiveness. While it doesn’t conclusively
determine that effective leaders are more ethical than ineffective ones, the
results do point to a clear difference between the two groups regarding
strength of power motive and ethical complexity in making decisions.
Ineffective leaders tend to have less strong power motives and
also reason at the Conventional Level, wherein doing the right thing is
construed as doing one's duty in society, upholding the social order, and
maintaining the social welfare. Effective leaders, on the other hand, have
stronger power motives and reason, on average, at a significantly higher level
than both the ineffective group and the general populace (only 28% reportedly
reach this stage of moral development).
They tend to reason at the Postconventional or Principled Level, wherein
moral decisions are generated from a complex set of rights, values, or principles.
When confronted by ethical dilemmas, effective leaders make
decisions based upon significantly more complex cognitive reasoning than do
ineffective ones. While driven to gain
positions of influence over others, effective leaders are more likely to view
the ethical issues they encounter from the broadest possible perspective,
taking into account multiple stakeholders, principles, circumstances, issues of
rights and justice, and the consequences of their decision for all affected by
it.
Effective leaders evaluate moral decisions more upon the basis of
calculated rights, values, or principles than upon public opinion. Further, they are more likely to make
decisions regarding moral dilemmas that may be unpopular with the majority, yet
decisions they have reasoned as “right,” and are therefore willing to accept
the ensuing conflict that may result from the decision. Less effective leaders, on the other hand,
reason about the same moral dilemmas within a framework where doing the right
thing is construed more simply as doing one's duty in society, upholding the
social order, and displaying obedience to authority. Less effective leaders would tend to concern themselves to a
greater extent with how their decisions regarding the moral dilemmas their
organizations face would be viewed by others, both within and outside the
organization.
These findings are consistent with research in the area of
effective leadership. The proclivity to
face conflict, rather than avoid it, when one’s decisions are challenged by
others is characteristic of many findings on effective leadership. Additionally, the ability to shape and
influence organizational vision rooted in firmly held principles is a hallmark
of effective leadership, and one supported by this research. Rather than a preoccupancy with trying to
please others, effective leaders earn respect by making tough decisions based
upon principled criteria, taking responsibility for those decisions, and
proceeding on that path of influencing others in this direction with
conviction. That perspective on effective leadership is echoed in these
findings.
The validity of these findings is grounded on the premise that a reputation for effectiveness is a valid measure of executive effectiveness. Such strong group prediction is noteworthy in research of this type and suggest directions for further study. Even though the study of effectiveness is an increasingly problematical concept in the management literature, it has been reported elsewhere (Heimovics, Herman, and Jurkiewicz, 1993; 1995) that the findings of this body of research are not methodological artifacts of the use of the reputational approach. The indispensability of executive leadership to organizational success in the nonprofit sector has been well established. Progress has been made in identifying those skills distinct to effective nonprofit leaders and lacking in a comparison group. Replication of this study in a variety of organizational settings would enable these hypotheses to be generalized to a broader population, with the pivotal nexus being an accepted effectiveness criterion. The empirical link demonstrated in this study between ethical reasoning and effective leadership is an important first step in examining these issues more closely.